Employees as key assets in transactions involving Chinese investors

Chinese investors regularly highlight the employees of a company to be acquired as key assets in the run-up to a transaction. In addition to general considerations such as knowledge of existing business relationships of the target company, internal business processes and company-specific know-how, the experience and familiarity of the senior staff with the business practices of the local market are of primary importance to investors, not least due to significant differences in corporate culture between Chinese and German companies.

Despite this realization, the methods of retaining senior employees in the medium to long term are often not compatible with German market practice and the expectations of aspiring medium-sized companies. Although the professionalism of Chinese investors is steadily increasing and they are increasingly better prepared for the challenges of post-merger integration, there is still often untapped potential for improvement in employee share ownership adapted to the German market.